When President George W. Bush recently announced the proposed fiscal year 2002 budget, the Intellectual Property community was shocked to learn that the United States Patent and Trademark Office (USPTO) budget would be slashed by $207 million dollars. Although the USPTO is projected to earn $1.346 billion in revenue, President Bush’s budget mandates a spending cap of only $1.139 billion for 2002. The remaining $207 million dollars in revenue will once again, as in previous years, be stripped from the USPTO and the Intellectual Property community. Particularly troubling is the fact that Mr. Bush’s proposed budget seeks to divert $90 million more than the $117 million diverted in 2001 by then-President Clinton. Since 1992 alone, the USPTO has been forced to divert over $500 million dollars to subsidize unrelated government programs.
The USPTO is 100% fee-funded, meaning that all operating funds are the direct result of application and maintenance fees paid by patent and trademark owners and applicants. Unlike the vast majority of other government agencies, the USPTO’s operating expenses pose no tax burden to the general citizenry. In a year in which the government continues to boast significant surpluses in most bureaucracies, many in the Intellectual Property community view the siphoning of USPTO revenues as a harsh injustice, especially given the USPTO’s unprecedented growth.
As indicated by a joint letter to President Bush by James Sensenbrenner, Jr., the Chairman of the Committee on the Judiciary and Howard Coble, the Chairman of the Subcommittee on Court and Intellectual Property, “since 1996, the agency’s workload has increased by more than 60%. Last year, trademark applications increased by more than 25% for the second consecutive year.” In order to accommodate this explosive growth, it is crucial that the USPTO reinvest its revenues to hire additional staff and technological resources.
Intellectual Property is the fuel that has propelled the high-tech economy to explosive growth in the last decade. In order to maintain our economic charge and create new jobs, it is critical that the USPTO continue to improve the efficiency with which it approves patent and trademark applications. With each new patent and trademark issued comes a new product or service to motivate the economy. Unfortunately, the Bush budget proposal will negatively impact the USPTO and intellectual property community in variety of ways.
The most obvious detrimental impact of the Bush proposal is that the duration of the patent and trademark registration process will drastically increase. For example, the average patent review process is expected to increase from 26.2 months in 2001 to 26.7 months in 2002. Additionally, Mike Heltzer of the International Trademark Association states that, “average first action pendency for trademarks will rise to an estimated 8 months from an estimated 6.6 months in 2001 and an actual 5.7 months in 2000.” This increase in duration will significantly delay the release and launch of numerous new products and services.
The Bush budget also predicts a significant reduction in USPTO personnel due in large part to attrition and a hiring freezes. With an average income of $61,000, patent and trademark examiners can generally earn more than twice their current government salary in the private sector. The lure of private practice continues to increase the USPTO’s attrition rates well above 15% annually. Due to this vast attrition, the majority of examiners have less than three years of practical experience. Although this does not suggested that the quality of USPTO patent and trademark examiners is lacking, it does demonstrate that senior examiners are forced to spend too much time training junior personnel rather than examining new and pending applications. With lack of funding, quality of examination will continue to remain an issue.
In the end, stripping the USPTO of funds it desperately needs to perform its duties will detrimentally impact not only the Intellectually Property owners that fund the USPTO, but also the global workforce that will not be able to produce, manufacture and sell the goods and services associated with the Intellectual Property that flows from the Patent and Trademark Office. In realizing the importance of this issue, we urge everyone to contact his or her elected representatives in Washington, DC, to request that appropriate funding be reinstated to the USPTO. Our nation’s recent economic downturn can only be rejuvenated via the vigorous innovation spawned by the creation of new Intellectual Property.